>> china contagion. the shanghai composite drops more than 8%. stocks selloff intensifies with asian market sharply lower today. the commodities crashed. the bloomberg commodities index hits a 16 year low. brent crude falls below $45 for the first time since 2009. back to the ballots. greece set for fresh elections. his bid to form a government will fail. ." i am to "countdown
anna edwards. we're coming live to you from london. let's talk about the asian section -- session right now. it really tells you how the story is going on which is that the shanghai composite has lost all of the gains that it has made since the start of this year. back to where we started. the picture is much broader in terms of what is happening. lastly, u.s. stocks ended the end of the week the lowest in four years. are witnessinge in asia the biggest drop in asian share since 2030. with that as the broad equity picture, let's get over to our reporter in asia. let's go to david who has all of the details for us in hong kong. absolutely brutal session in asia. it is something that we have not seen in watch wrote years.
you mentioned the worst since 2013. in the last few minutes, things have gotten a little bit worse. a regional benchmark -- down about 4%. it tells you something. the outperform is down to present -- that is malaysia. your have to look at volume. very heavy. a lot of these stock prices in asia are getting bid down aggressively. this is the scope of the selloff. the regional benchmark -- 96% of lower.cks moving we mentioned shanghai. we are down 8.7%. that will be reopening for the afternoon session. it raised the gains for the year. it tells you the story of where we are right now.
that is your year today chart. this move up, that is a 60% move up. this was the chaos that happened in june. what is more important at this point is that we are now trading at levels below, before when the government was saying that it was going to put a floor in this market. that level was right here. we are substantially below that. we could argue that this all started in china. oil is trading lower and copper is down. let me just mentioned this and we will get back to the map. outflows is the story across the emerging markets in asia. take a look at a lot of these currencies in the region -- in the region. is undersian ringgit pressure. fresh 17 year low. we are trading at 425 against the u.s. dollar. the last time we saw that level was back in 1998. theindian rupee, 66 to
dollar. that is about a 2.5 year low. a broad-based selloff. brutal as you say. let's get more detail on what is going on in the chinese market. let's hone in on the chinese challenges. thechinese market -- shanghai is slumping. the government intervention over to stopend has failed the markets slide. nick in beijing is live for us. what is behind this drop? thate now below the levels we reached when the government talked about putting a floor under this market. nick: there are a couple of things. when you have a market where there are a lot of margins trading, people taking out loans to invest very when things start
to go sour, it creates a downward spiral as people have to unwind their that's. there has been a lot of speculation over the weekend that the government would loosen the required amount that banks are supposed to have in reserves. that did not come. there was a confusion or an expectation that this might happen. is theat you're seeing disappointment or the uncertainty about what the government's real intentions are and how low they will let this market go. anna: that is the key question. we areare speaking, seeing that the shanghai composite has now fallen 8.7%. its biggest drop since 2007 in a one-day. a one-day period. how low can the shanghai composite go? nick: there was a great deal of concern that a bubble in the market -- about a bubble in the
market. there was considered to be quite a way that the market could go down. the biggest question is what is the government's intention here. the government has said that it wants to give the market a greater role and at the same time it has shown itself to be willing to intervene in terms of crisis. to prop up the economy. what you're seeing now is a of -- abt a great deal great deal of confusion. in the last few weeks, as the market has fallen, and the last 30 minutes or our when you see the government intervene to push stocks back up. that is what we will be washing -- watching for. anna: we will watch for that. the composite index dropping the most since 2007 in just today's session. things are broader than just what is happening in china. let's go to caroline hyde who is looking at the broader market reaction. welcome back.
across a selloff that is the markets starting with commodities. we are at a 16 year low. this is an index that tracks 22 rob materials. no wonder it is falling when you think that chinese growth will be the slowest since 1990. , downrgest use of energy goes the bloomberg commodity index. down goes oil. looking at brent -- trading here by 2.5% but the key take away is the numbers. it is the first time we have sinceome $45 per barrel march 2009. this is playing into oil trading over here in europe. meanwhile, money coming out of the u.s. dollar.
the bets are now holding that we will not see a rate tight come september. -- a rate hike come september. since the devaluation of the yuan. although this is playing into the fact that now is not the time to be hiking rates. the globalbilizing economy when you're worrying about asian growth and the spillover effects. on the flipside of that, it means the yen is rallying and the euro is rallying. the dollar is being sold off. on the flipside of that, whenever you see the dollar sold off, what goes up, gold. let's look at gold. we are currently rallying up 6% over the course of the last month. this is the best rally that we have seen since january. that search for haven is going on. looking at the credit markets, it means that money is going into japanese bonds, u.s. bonds
coming u.s. treasuries are rallying as well along with gold. credit risk is really starting to rear its ugly held -- ugly head in asia. havens. going into the of the day, we will be keeping a close eye on futures. it looks like it will be another sticky start to u.s. trading. off last the u.s. sold week. anna: interesting to see that role as safe a -- as safe haven that gold is playing. that was not the case earlier this summer. u.s. index features suggesting the six straight day of losses could be in store. let's go to our first guest. michael o'sullivan. great to see you.
we are trying to get this information from this negative session. hear wordsing to like spiral. how do you digest what we are seeing at the moment? michael: the epicenter is china. you control your economy, even partly control your society, but you cannot control markets. this is a lesson for the chinese authorities. they looked at their market and their economy from a close to point of view but they are now connected to the rest of the world. we are seeing the market contagion. we try to re-craft currency links. switzerland is an example from earlier this year. it was a very difficult thing to do. has done -- what that is sold out the health of the chinese economy as well as the intentions of the chinese authorities. inking at the stock market
china this morning it is down nearly 9%. to the extent that the chinese authorities have ordained the rise of the stock market over the course of the last year, and be moreult, it will painful to them. the rise of the stock market was all part of the bigger plan to have ae debt ratios positive affect and now it is going to opposite way. anna: before last week, u.s. investors managed to put china to the side and say what happens in the stock market, it is not linked to the real economy in china. perhaps we will be able to withstand that. lastly, things changed. the data was weaker for china. just how we do you think the chinese story is right now? michael: what has happened is that it has been weaker than the 7% that people ascribe to. cynical.ways been
most people in the marketplace have as well. the falling commodities over the last three months really has been the key sign of that. not the chinese stock market. commodities under since april onwards. we have disclosed that a. chinese -- china has been weaker than expected and as we look forward we can begin to expect i hope a coherent response from the chinese authorities to this. of theirfor the sake own economy but for the market impact and reputation. anna: latest news from the weekend is that china will allow pension funds to be invested in equities. do you expect further break cuts from the chinese, further devaluations of the currency? are all of those still in play? michael: the story of the
pension fund is a lower quality remedy than what the japanese have done allowing national pension funds to invest in equities. it smacks of trying to support the equity market. at this stage, what the chinese need to do is cut deeper to the heart of the economy. china is the only economy in the last 30 years where more money has been spent on property than spain and ireland. we all know what happened there. when i look at china, i see spain written on a greater scale. to their credit, i think the chinese authorities have been trying not to be spain or greece. which explains many of the moves we have seen in the last year. it is very hard -- anna: we will see what this means to the global economy. michael, thank you. the governor of the central bank in india is think we should not succumb to pessimism.
perhaps he will discuss where the global economy is being led to. stay with us here on "countdown" as we breakdown the stories that you need to know including the chinese slowdown, evaporating -- reverberating through the market and driving commodity prices down to a 16 year low. tells theficer deceleration was inevitable. is part ofeleration the logical process of the adjustment of this economy. why the greek snap election will not make that much of a difference to the greek economy. the elections will not mean change. he never advocated the grexit. and why he has no stake in the outcome of syriza. >> tsipras never let me be a
member of series a. i would serve his government more efficiently if i was outside of the shenanigans. my soul is broken up by the that the 12th of july capitulation has caused. what i can tell you is that it is my considerable opinion that the next election is not going to be able to give rise to a rationalwhich supports economic policies increased. north and south korean officials are still at the negotiating table. how will the market handle rising tensions between the two country. that is coming up on "countdown" in just a couple of minutes. ♪
since 2011 and emerging-market currencies have dropped to the weakest level on record. commodity prices have fallen to a 16 year low. safe haven assets including the yen has rallied while u.s. 10 year treasury yields has trouble of 2% your oil in london has slid below $45 a barrel for the first time since march 2009 as iran reiterated that it will increase production and u.s. drilling shows no sign of slowing. extending a drop of more than 7% last week. the most in five months. iran says it will expand outward at any cost to defend market share according to its oil ministry. this week is likely to see the start of the greek alleging campaign. a group of rebels threes a anmakers will first get opportunity to form a government. one of the parties chief players
has arctic knowledged that agreement is unlikely. greeks are expected to had to deal -- to the ballot box in september. the south korean president has called on north korea to apologize over what he calls provocation that led to an exchange of fire over the border last week. negotiators have been holding talks trying to diffuse the latest tensions. the leader has stepped up the mobilization, doubling the number of front-line units and ordering most of its submarines to see. some were on that story. the bureaued by chief in seoul. peter, good morning. good to see you. how long could these talks go on? we saw a number of talks going on between the north koreans and south korean. about to get to about 24 hours of the meeting. they met over saturday for 10 hours. they met until 4:00 a.m. they reconvened and in a couple
of hours, they will have reached 24 hours. they are sequestered. anna: things could continue. i understand that the lengthy negotiations is not unusual. how are south koreans reacting to this rising level of tension we're seeing across the border? say an uneasy calm this. they are used to this kind of tension. these negotiations are going longer than they would like. they are going on with their lives because they have been through many of these before. anna: how our markets reacting to all of this? peter: very nervously. yuanu have seen, the dropped to its weakest in four years. any kinds of tensions, particularly prolonged
negotiations makes the market very nervous. the weakness with china's growth is making that even worse. bit of a broader perspective. how serious are these tensions and these negotiations in relation to others that we have seen over the years across the order? -- across this border? -- this may bee more serious. talks, rhetoric and buildup on both sides is a bit unusual. .e will have to see you never know -- and that is the general feeling with the folks here. you just never know what this relatively new leader in north korea will do. anna: peter, thank you very much for joining us. let's talk about emerging markets more broadly now. currencies are at their weakest
levels on record following the biggest drop in asian shares in tw years. let's go to mark, bloomberg strategist. also still in the studio with us is michael o'sullivan. what welk about oil and are seeing in the equity markets. oil and the equity markets continue to drop. are we suddenly seeing the following of china> >> the market is focused on where to go next. on how this isng being misguided at the moment. we are seeing major moves this morning. i think the free-floating currencies will see the most pain in the interim. malaysia, they have all fallen off about 50% against the euro ready this month. ?nna: michael, are you worried
decide toe saudi's lose theirs or other parts of the gcc? where are your concerns? that thisy concern is now moves from a market affect to an economic effect. emerging markets, the currencies like in turkey and brazil and malaysia -- it is a crisis with the prospect that this could spread to other countries. some of the oil-producing countries. some like the emirates have been adjusting their budgets to the lower price of oil. others have not. curious of your view on the imf. some are saying that the imf should not have been involved in the bailout for greece. do you think they will say or do anything here?
mark: i think there will be some official comment. there is the meeting in jackson hole. i do expect a verbal policy reaction. -- severalcentral central banks active in the cycle. i think that maybe emphasized at the end of the week even if the imf does not met with the statement. anna: a number of the currencies --where is the pain going to be felt most? will we see the more liquid currencies already responding. mark: everything is being destroyed. markets are getting very messy. at the moment, the main fundamental is price. that is hitting p&l. that will continue to get hit are some of the oil exporters. oil is trading at a six-year low. for oil to belan this low for this long. anna: will we see a big
turnaround in oil for some reason? a real evaluation of whether the fed will move in september. mark: the feds rate hike for the fact that they will not hike so super this -- the whole hiking cycle may be shifted back. i would like to believe that it will stop for some of the currencies assume. other places, there is genuine bad fundamentals. as michael was saying, places that have economic and political crises at the moment. anna: thank you. o'sullivan will stay with us a little bit longer. it is 6:26 a.m. here in london. we will take a short break here ." the shanghai composite drops the most since 2007 and it could be on course to drop the most since 1996.
anna: welcome back. 6:30 a.m. here in london. here are the stories you need to know. the global selloff deepens as asian shares see their biggest drop since 2011. emerging-market currencies have dropped to the weakest level on record. commodity prices have fallen to a 16 year low. safe haven assets including the yen have rallied. u.s. 10 year yields have dropped 2%. oil in has lived below $45 per barrel for the percent since march 2009. iran has reiterated it will increase production.
extending a drop of more than 7% last week. the most in five months. iran says it will expand output at any cost to defend market share according to its oil ministries website. turkey is heading for elections in the second time in less than six months of the political party misses the deadline for a governing coalition. this will take place on the november 1. the political wrangling have -- has been accompanied by clashes with kurdish militants. a wave of violent spilling over from the war in syria. to the immediate market story. caroline hyde has an update for us from the markets. how things are performing in asia. how the broader market picture is shaping up. it was a real roller coaster last week and today started in fine form. phenomenal moves that we are seeing at the moment and if you're in the markets, you're having a difficult time.
this is the all country world index that we are looking at right now. $5 trillion worth of market value across global stocks since the chinese -- evaluation. checking out the terminal your seeing downward trends across the board. asian stock markets being hit the hardest at the moment in the open. u.s. futures signaling it will be a down day in the u.s. and stocks will be hit once again. it was down 3% on friday. the stoxx 600 wiping out 640 billion euros worth of value. the futures are signaling yet another down day. switching gears. looking at foreign currencies. the euro is rallying at the moment. the dollar is dropping across the board. now reassessing when
you will see a federal rate reserve hike. many are feeling it could be postponed. that is playing into the deflation story. that means that janet yellen could see ramifications across the world and feel that now is not the time to add to the destabilization. you are seeing old rally. this is where you are -- you are seeing gold rally. is also being the haven. yieldu.s. treasuries down. gold just coming down into the red today but it is on track for the best weekly performance so far this year. to leave you with one lesson across the commodities spectrum. the bloomberg commodity index had a 16 year low. think about the oil market. i want to leave you with what has been happening in the oil market. come up below $45
a barrel. this is significant. this is playing into brent crude. since march 2005. going to see the slowest growth since 1990, that we'll hit energy, grain, and metals. anna: let's get back to michael o'sullivan. i mentioned earlier on that the central bank governor in in yet is talking about how we should not succumb to pessimism on the global economy. it is easy to be pessimistic when you look at all that caroline has gone through. where our markets running away with this negativity? michael: it is easy to be shocked rather than frightened.
colleagues -- it is encouraging to hear him be relatively more optimistic. if we had this conversation last thursday morning, we would be u.s.ng about the strong growth, and the housing market. greece off of the headlines. pmi'srsday, a lot of the were pretty well settled. i think the sense of perspective is in order and that is what we will try to do this morning. take people by surprise is the speed of the selloff. it has a lot to do with for polio insurance. -- portfolio insurance. anna: people are taking options to sell stock. michael: over the last few months, investors in europe have been relatively well protected
because they feared greece. the u.s. market -- the general investors have not been well had -- well hedged. that has been one of the factors that has driven the u.s. market down. the u.s. is not an economy that is overly exposed to china. not a badices are price of -- a bad thing as such. we have to separate the economic effect from the financial effect. anna: this plays into the fed. how does it play into the fed? michael: my personal view is that after nine years of not having had a rate increase in the fed, remembered none of the major central bankers in the recent careers have raised rates since the fed last raised rate. we have had nearly 700 interest-rate hocks internationally -- interest-rate --s interest
internationally. i think there is a danger to their credibility. if they seem to back off in the face of a tantrum from markets. i know the market is beginning to price down a rate increase but i think it is still debatable as to whether they will do so. hole meeting where janet yellen will not speak. in the context of what is a promising recovery in europe. anna: with so much expected of central bankers right now, this off-site, that takes place annually. where are the headlines going to be made? are we going to get any clues from the summit? i will behe things watching for. stanley fischer will be taking part in one of the sessions. he is very seasoned.
he was head of the imf in the late 1990's. the sense that he makes of this will be very important. we also have the upcoming visit of the chinese from ear to the u.s. u.s., china, the and other economic regions are better coordinating international policy. i suspect that sometime this week we will see policy action in china. anna: if that view took hold. michael: i think european equities and commodities are being -- are seeing value emerge. we are still overweight in european equities. we are now taking commodities to on -- from underweight to neutral. that has been a good trait.
we are now in the recapitulation stage of that. it has come a long way. since july. story seemny of the to come for the commodities space right now so that could be interesting. it is 6:39 a.m. here in london. a lot has happened over the weekend increased after tsipras resigned triggering likely elections. the leading syriza party has led and parties from all parts of the political spectrum are lining up for a go at forming a government. tom mackenzie joins us now from athens. how can we expect all of this to play out? now, the leader of -- democracy is going to be will be handing back his right to try to perform a government.
it is unlikely he is going to do this. he is going to go back to the president. it now goes on to popular unity, the third-largest party. it is best it has been set up by the syriza rebels. 25 mps. that is crucial are the -- for them. they need to get their message and rant out. very littlerty with funding and this is a party with very little strategy and infrastructure going into what is likely to be this electoral campaign on september the 20th. the date that is most likely. these three days, they will try to maximize them. on thursday, the president andes will close parliament an interim government will be put into place. official campaigning ahead of the election will start off at the end of the suite. that is what we are expecting. the political sands are shifting.
there have already been differentons between political factions seeing if they could work together. any possibilities of coalitions. we spent the weekend with two .layers the golden dawn and popular unity. dawn which has been accused of having neo-nazi links, something they deny. has 17 mps right now. they are hoping to increase that. they have 6.3% of the vote. they are looking at 10%. they're looking to maximize their votes by addressing the migration crisis. measures thatity are likely to kick in in october as part of this third bailout program. anna: tom mackenzie, reporting live from athens. we will take a short break. coming up, last week was a brutal week for markets.
anna: welcome back. you're watching "countdown" on bloomberg television. it is 6:45 a.m. here in london. here are the stories you need to know. sees asianselloff shares having their biggest drop since 2011. emerging-market currencies have dropped to their -- their weakest levels on record. safe haven assets including the yen have rally while u.s. 10 year treasury yields have dropped below 2%. oil in london has hit below $45 per barrel for the first time since march 2009. iran reiterated that it will boost production. extending a drop of more than 7% seen last week. iran says it will expand output at any cost.
heading for elections for the second time in less than six months after political parties missed the deadline to form a governing coalition. the new round of voting will take place on november the first. the political ranting has been accompanied by escalating clashes with kurdish militants in the country's southeast and a wave of violence spilling over from the war in syria. to the world -- two of the world's largest economies are turning their attention to global climate today. launched obama first it earlier this month. india is expected to issue a statement on how it plans to reduce carbon emissions as part of his pledge to the united nations before december's climate change conference. thoughtss now with his is the head of natural gas, trevor. u.s. start with the
we will hear more from president obama trying to sell the plan we already know a great deal about. how much is that the biggest hurdle that he faces right now, politically getting the backing for this. solve this in to the u.s. to get this plan going. a lot of the coal lobbies are against this. they view this as an anti-coal bill. he is really trying to champion this as one of his big wins. there is resistance. a lot of resistance from the coal lobbies and the colts states. a number of states have said that even if you put this in, we will not comply. he does face big domestic hurdles. to get it done and to get everyone joining in. how does the dramatic falling commodity prices play in to the whole environmental debate?
it has made the renewables a lot more viable. coal producers are now feeling more vulnerable. trevor: the worst thing that asld happen for renewables an energy source is what has happened to oil because that -- alternative sources of energy and the more traditional ones a lot more attractive to the consumers and that means the renewables can look a lot more expensive. renewable costs -- unit costs have come down dramatically. we had seen technologies like wind and solar. he probably wants to get the u.s. engaged in this as part of a green revolution. that is a lot harder with low oil prices. anna: how does the country how do the--
countries stack up? they all have to present their plans for carbon emission reductions. reading through the pleasures -- the pledges we have so far, they are all working off of different timescales and raise rates. who is going the extra mile in doing more? trevor: it is complicated. -- there is a lot of differences. are from today, how do those pledges look going forward and you could say that europe and the u.s. in terms of what they want to do are probably about the same in terms of emission reductions. europe is starting from a lower level in carbon per capita than the u.s. is. europe is doing a lot more than the u.s. in general on this but
in terms of those narrow pledges, they are probably doing all right. when it comes to india, it will be tough because india has been a big resistor. they say their per capita emissions are way below those of china. capita very low per emissions and therefore development is more important than emissions reduction. i think that sets the scene for today. people are not expecting that much from india. they do want to see the india pledge you cannot expect that much from them. anna: good to preview what we could see. the prefect of the vatican secretariat for the economy has been speaking to bloomberg television about the ongoing efforts to make the vatican's financial institutions more transparent and efficient. the vatican's financial czar has called for more honesty and transparency in the way the church handles its well.
>> we of just prepared the account for 2014. perhaps, for the first time in history, they are comprehensive and substantially accurate. we have challenges. we have had deficits in the last two years. our pension fund is sound. for 10 or 15 years but we have to take significant measures to andre that it will be ok the five years. we have to implement -- we have adopted modern accounting procedures. let's dip in to our bloomberg website. bloomberg.com. looking at the picks of our bloomberg site.
us?e would you like to take take us into the world of emerging markets and foreign exchange. interestingly, our reporter in context on interview the prime minister of the country who said terrifyingly to expect more pain. he said that many of the emerging-market currencies, devoted to resources are at risk including saudi arabia and uae. people never felt more terribly more vulnerable to a devaluation. interview, hee said the currency move was prompted by china. or is this something that has been building for a while from the commodity prices? >> some of both. he said he felt that the timing good giving the carnage in the u.s. market on friday. he said they got out in front of it. if they had not moved, there
would have been a lot of pressure over the weekend. anna: he said at the end of the day most of the oil-producing countries will go into the free-floating regime. he is talking about saudi arabia and the uae. does that seem likely? all things are possible. breaking these currency links is very difficult to do in an elegant way. the swiss being a good example as well as the chinese. i suspect the saudis may resist for some time. seemay seem moot -- you may moves in the oil market. >> we had an interesting story last week showing a growing disparity between the saudi rates and where the spot rates are. the first rules we learned during this was conversation is about deep writing the currencies and that
you cannot talk about it before it happens. what else do we have on the website? april -- a brutal week in the markets very >> his thoughts are what is ahead. unfortunately, what he seems to be saying is more pain. unlikesons are because the past carnage, the tapering of the financial crisis, this is coming from emerging markets which are harder to control and central banks cannot bail them out. those times that people might want to be seen buying on the depth but now given the violence, people will just want to sit it out. anna: how much do we need to worry about the way that people structure their portfolios? driving the turmoil in the markets right now. one of the things he said is that portfolios are designed to unwind during turmoil.
that risks contagion and overshooting. how much do we need to worry about the role of computers? that brings a different character. michael: risk management. we have gone through this bizarre. in the u.s. where the s&p was held in a low volatility regime. i suspect that a lot of people will have set their risk that it's for that kind of regime. and you get the explosion -- explosive volatility, i suspect that is one of the factors behind the violence of the last two sessions in the u.s. last week. anna: take us somewhere different. truffles. >> south africa. chairman has a place in
south africa and spent the last several years trying to firm them and for the first time they of actually produced some commercial lack of balls -- black truffles. it will displace gold or coal anytime soon. anna: is there an index? tim and michael thank you very much for joining us. leave us with your final thoughts on commodities very michael: we have been underweight. we are now neutral. we are still underweight in emerging markets, equities, and currencies. for european equities this will prove to be a buy on the dip opportunity. anna: thank you very much. coming up next, in the second hour of "countdown" we look
anna: china contagion. the shanghai composite drops again. the global stock selloff intensifies with asian markets sharply lower today. the commodities crash. the bloomberg commodities index hits a 16 year low with trent crew dropping below $45 per barrel with the first time since 2009. back to the ballots, and greece is set for fresh elections. welcome to the second hour of
countdown i am anna edwards and let's get straight to what is happening in the market and i will give you this picture of the shanghai composite. morningline story this is at the shanghai composite erased all of its gains for the year. this is the picture we have for you on at your today chart. and indeed the amount it is losing today looks as if it could be the most since 1996. we're also sing a broader spectrum of losses since 2008 and all of this following the doubt going into correction territory. let's focus in on what is happening in this asian session right now. david ingle joins us from hong kong with the latest. david: a very good morning to you and a and everyone from europe to suggest staying in bed
if you're looking to trade right now. this is the type of day that shortens mornings. throw everything out the window because it is a broad based selloffs. you're looking at the worst day for equity investors going on way back to 2011. a lot of the stocks are getting bid down quite aggressively. 97% of stocks on the regional edge marker being traded lower. shanghai's looking a little bit better right now but that is a little bit of sarcasm. it went down as much as 9% at one point and they are just transferring from one market to the other so the philippines right now is taking a big hit. -- nikkei to do five 225 topics index is close and
4.6% in this is getting hit two ways. people are pulling money out of equities and that is being driven into the japanese yen which is on a six-week high against the dollar getting on most of these asian currencies. we've been talking about this week after week that is hitting fresh the 17 year lows. whacked downting all of thisut together, i was doing some simple math and the collective damage across asian stock if you strip away and look at the value that simply disappeared, 1.1 trillion u.s. dollars that is what simply vanished. that is a story in asia we have a couple hours left in the
trading session, suffice to say it is unlikely we will see broad-based rebound at this point. anna: david, you bring us no good news. $5 trillion has been erased from the value of global stocks since china unexpectedly devalued its currency and i read that a few hours ago so perhaps things have worsened. let's continue the conversation on the stock slump. let's get the view from the mainland. greg, good to see you. what is behind the latest drop? may we are behind, it was and since then things have been incredibly volatile areas what is behind the latest news. in july there is a huge plunge and the government stepped in and boosted the arising marketaw
again but in recent weeks since basicallyevaluation regional sentiment has been pretty poor. there are fears of a currency or awesomely starting of devaluations in vietnam as well have started to worry investors and there was an expectation over the weekend that the central bank might step measures,re easing perhaps cutting what they call the preserve ratio. they flooded the banking market with funds which could have meant a boost for shares but that did not happen. instead we did see a
policy announced from the chinese government which was around allowing chinese pension funds to buy equities. but as we see the losses have continued today. how low can ago? what are you hearing? uncertain as very to the direction the government will take. if they decide to step in again like it did in july, and start buying shares, and ordering their companies to buy up shares , perhaps the market could recover. at this point it was very unclear. people say that valuations are very high, particularly of the smaller stocks. the ones listed in shenzhen. anna: let's broaden the conversation and look at the other asset classes and how they are moving around and what has
proven to be a volatile morning. focus in on any of the other asset classes we need. are alreadytures firing up and it will be another brutal day. already seeing slumps we could see the u.s. stock 60 loses much us three point 6%. we are also sing the cac 40 likely to fall some 3%, the dax 3.3%. these markets are already close to erasing all of their gains for this year. the dax clinging onto its lowest since january but could erase that today. wiped 640 billion euros off the stoxx 600 last week alone. feltly, more paid will be when it comes to equities. we saw $5 trillion wiped off the
anti-ready of the global stock market. fx, money moving out of the u.s. dollar. as toeem to be realigning when we will see a federal rate reserve hike. september,t could be 50-50 was the view there. now it looks like less than 40% believed we would see a rate hike because they feel the u.s. federal reserve could take into account deflation stories. i deflation story that has been pushed lower. you are looking at the oil markets. $45 for the first time since 2009. clearly money coming out of the oil market. the concern is china. the concern has been the this ision of china,
something that fuels the desire for grains and metals. when it starts to slow to the levels we have not seen since 1990, no wonder you're starting to see the commodities play into all of this. expect big moves among the oil companies here today. money is moving out of the risky assets and moving into havens such as gold and u.s. treasury's. thank you, we will keep an eye on all of those asset classes as you described it there. we have been to asia, and we talked about china. let's bring things a little bit talking about the middle east and the sentiment and how it is moving around the world. i have that dubai stock index here. index, it opened
5% down. this is a three day chart. this is the second day of the trading week over and dubai. we saw weakness coming through in some of the other markets and abu dhabi as well. abu dhabi stocks dropping by a 5.1% at the start of the trading day. the equity picture looks very negative. reporters over and china. their weakest levels on record. strategist joins us once again. good to have you with us. little oilre a prices. we are seeing them continuing to drop. are we going to see more pegged emergency market -- emerging market currencies coming down as
a result? emergingthink all markets was stay under pressure here. hedged currencies is probably misguided. currencies as the main story this week. even if you get a one-off move -- kazakhstan was kind of extreme and 20 days, but a lot of the currencies have lost 10%-15% against the euro and the dollar in the last month alone. anna: they are enjoying prominence in the national media that perhaps does not fall to it often. which currencies are likely to feel the pain this week. if you're looking at where it perhaps some are thinking but testing the resolve.
but that weakness might be expressed elsewhere. what do you trade instead? guest: the real pressure is the oil exporters. all emerging markets are suffering based on stop losses and the damage being done. anna: how much more of this am selloffelloff -- em-fx are we expecting to see? without turning the oil price around -- is that the fundamental or could the fed be material and what it decides in september or december? augustwe are in liquid summer markets. in the short-term it could go a long way. soon we will start
differentiating between those were valuations that stretched or those where there is genuine economic problems like russia anna: then recession indian central bank governors sang just this morning that we could -- that we should not succumb to pessimism that it is not the role of the central banks to elevate sentiments him. when you look at emerging markets fx it must be very frustrating that we have to have this is one conversation and not 20 because there are so many different stories that that basket encompasses. >> absolutely. this morning it is one story but ultimately there are very different fundamentals. it is a commodity with growth. the collapsing commodity is good accounta and at current it is basically shrunk and is nonexistent now. it isis a good story but
been damaged with everywhere else. are all onet they basket but differentiation will be important going forward. peg: you're looking at the and the regime they operate on those are the big differentiators. >> up to the last few weeks we're focused on the fed rate hike. that rate hike will be priced in this morning which means it will depend on how serious the chinese slowdown. unfortunately, some countries have both issues. anna: thank you for bringing some clarity. coming up on countdown, alexis tsipras continues the search for allies who can help them meet the conditions of the third bailout package.
anna: welcome back. it is now 17 minutes past here in london. the global selloff deepens and asian shares have seen their biggest drop since 2011 and emerging-market currencies have fallen to their weakest levels on record. haven assetsfe have rallied while treasury yields dropped below 2%. oil in london has slid below $35 a barrel for the first time since march 2009 and iran reiterated it will boost production. will expand output at any cost according to its oil ministry news website.
the south korean president has called on north korea to apologize over what he calls provocation that led to an exchange of fire over there heavily fortified border last week. jong-un has set up the mobilization of his forces doubling the numbers of frontline units and ordering most of his submarines to see. a lot has happened over the weekend increased after the prime minister alexis tsipras resigned triggering likely elections. the leading party has been split and leaders of all spectrums are lining up for ago. tom mackenzie joins us now from athens. running us -- run us through how this is going to play out as all of these parties jockey for position. >> there has been a flurry of political activity over the weekend. new democracy was given three
days to try to form a government and it looks very likely they will fail to do that so in 45 minutes they will hand the baton to popular unity which is the third largest party set up by the syriza rebels and 25 mp's currently. they have very little infrastructure. have no offices and no funding. these three days are essential for them. they will meet with other groups and will try to expand their base and use this publicity to get their message out which is essentially syriza mark one, anti-bailout. that is where we were at thursday when they are likely to go back to the president it is likely that they will fail to form a government and in the present hood will all -- in all thanihood close parliament
you're looking at an interim government and election campaign kicking off thursday and friday this week. anna: i understand you have spent the weekend with two of their most radical parties. what did you learn? >> an interesting weekend. we spent saturday with the far accused of having neo-nazi links and there are criminal charges hanging over many members of that party. they deny any neo-nazi links though they do admit to being racist, son of them we spent time in their headquarters where they are unofficially ticking off their campaign. they are going to be using the migration crisis and further austerity to grow their base. there 6.3% of the vote and they're aiming for 10% but they feel they have momentum with them. we also spent time with popular unity.
the youth wing is very enthusiastic. they know they have a tough sell but they are determined to throw the kitchen sink at this bailout thatetermined to make sure certain elements of this bailout are not pushed through parliament that they can get two seats they will do everything they can to scuttle that third bailout. anna: is the far right making a play for power? >> there is genuine concern here in greece that they will entrench their power base and get a few more percentage points. they currently have 17 members of parliament they are very confident they told us that they 25 they expect to get to the third-largest party. we spent time with her third most senior member of parliament
who laid out his plans and said they will be going to areas of athens where there are high levels of immigration to push their message. whatever that means that will cause concern for some people here they say tuesday and wednesday of this week they will be going to ireland or those islands are struggling with immigration no try to fuel up anti-immigrant sentiment there as well we spoke to people and it didn't take us very long to find people who were going to be switching their vote. we don't want to overplay it but there is concern here that they are going to be increasing their support base. anna:, let's tom mackenzie joining us with the latest from athens and yanis varoufakis has saying why then elections don't mean change and he never advocated a grexit and why he has no stake in the
outcome for syriza. >> i never was a member of syriza. alexis tsipras never let me be one. he thought i would serve the government more efficiently if i was outside the shenanigans. issoul is syriza and my soul broken up by the division that the 12th of july capitulation has caused but i can tell you that it is my opinion that the next election will not build to give rise to a majority which supports rational economic policies in greece. anna: turkey has failed to form a coalition government which means voters will be headed to the polls there for the second time and under six months. a new election is expected to be held in november to let's speak now to cynic who joins us from istanbul. we are seeing a lot of political
instability right now, give us the latest. >> hello anna, for the first time in history, turkey will hold a repeat election after the ruling party failed to form a coalition. , august 23 was the deadline and they could not agree with any opposition parties sunoco looks like november 1 will be the date that turkey goes back to their polls but that hasn't been officially announced yet. some people say that new elections may not help turkey out of the political limbo it is in. according to opinion polls it is uncertain if they will be able to gain the majority it needs in parliament to rule the country so we may be back at square one where coalition talks are again on the agenda so we are in wait
so see mode to anna: instability in the political world has been causing turmoil on top of the whole emerging market story we are seeing more broadly how much is this putting the currency under. >> the lira is hitting record lows on a day-to-day basis. of the worst performing currencies in emerging markets down 20% this year. the government is not that concerned and says three per dollar is a competitive level but some investors are not convinced her it the central bank isn't helping matters either. it is on a wait and see mode saying it will not raise rates until the fed does. this is concerning some economists.
anna: welcome back you are watching "countdown." here other stories you need to know. the global selloff deepens and asian shares have seen the biggest drops since 2011 an emerging market currencies a fallen to their weakest on record. safe haven assets have rallied well treasury yields dropped below 2%. oil in london has slid below $45 a barrel since march 2009 as a run reiterates -- as i ran reiterates that it will boost production. they say they will expand output at any cost to defend market
share. this week is likely to see the start of greece's election campaign. lawmakers will get an attempt at forming a government just three days after creating a new political party. that means one of the new political players already having a knowledge the agreement is unlikely so greeks should expect to head back to the ballot box in september. david ingles joins us now from hong kong and i guess the best you can say about today is that we are off of our lows in china? david: yes. we were down as much as 9% one-day. serious, the out performer today is the malaysian market only down 2% and the rest of the day getting absolutely silly. the volumes are quite heavy and a lot of these stocks at some of
these markets are already closed but those that are still open targeting a trading halt. the philippines announced trading was halted their worried these exchanges that are still open are getting bid lower quite aggressively so the only position that would've made money today is if you are long on the japanese yen. element ofre than an flowing into safe haven assets. gold is actually trading lower guys soernight for you let me slice and dice. we are down 5% on the regional benchmark. oil andtocks down 5% grass, obviously. the banks are also taking a big hit down 5%.
let me bring it back to the we are atomposite it 3240 just put this into context we have erased the gains of this this market was up as much as 60% at one point and that is the for the government set we had a bump here but we 18% or 19%ughly era to where we are right now. is this the floor? it is very hard to say but there is so much risk aversion in asia today. yields are on the way up enemy show you that what is happening in the bond market. we are now back to 2% and japan is down as well. yields are coming down 36 basis points and south korea actually said they will start intervening
preemptively without going into details. let me just split that and get you an update. 225 -- it iss that not updating, there we go. 250 basis points. that is the story in asia but you guys have a trading session to get through. ?nna: what have you done you have broken the technology. it is been a tough day, i know. let's go to caroline hyde who has or i on how all of this will translate to asset classes and beyond. caroline: will see a selloff accelerating. selloff in thet extent of about 3% declines aross the board headed for lost 4% decline and last week the stoxx 600 had the worst week
in four years. saw a 13% selloff in 640 billion euros in eradicated over the course of the week. 18% of itscurrently previous tight this year which means it is but to percent off a bear market. we are already in correction territory and if you're looking at turkey who just hearing earlier that they are closed to a bear market concentrating in that realm and if they close today it will be reaching a bear market. here i have a show of volatility. this is the fear index here in europe that escalated up 18% on friday and we are likely to see more volatility to come. this is the concern we are starting to see. what will be very interesting is
trading volumes. they were 78% higher than usual. will we see them higher here as well? the bloomberg commodity index i also want to keep an eye on. we see money moving out of commodities because this is all stoked around concern about china. world'sikely to see the second biggest economy growing at this lowest -- the slowest pace since 1990. you will see on my screen a 16 year low. brent crude below a five dollars that is the first time we have seen that since 2009 so clearly there is money moving out of commodities and into the haven that has been gold out of the u.s. dollar. anna: thank you very much. let's continue this conversation about where equity markets will
head more broadly. in, thank you very much for coming in i have a chart next to me of the chinese stock market and just what it has done today down 8% now it has been down lower. perhaps the only positive thing you can say in today's session. had you read the momentum behind the selling? >> what we will be looking at his we will look at this next year and say what we were looking at was a global economic slowdown and the asian angle is just one factor. what we have found is that when china catches a cold, global equity suffer in a big way so there is clearly a specific issue in china but i think it is more of a global issue that we are examining. slowdown areh of a
you talking about? from thehina slowing perceived slowdown might not be the end of the world but something substantially weaker changes the dynamic. or it is about the actual scale but i think it is about the direction. because the willingness of the authorities to devalue and aim to weaken against the u.s. currency at the same time as you have the bank of japan doing that and the ecb doing that that pushes up the dollar and when the dollar goes up to get weaker pricing and that kills global earnings. and that is really undermining global equities here. i found a great chance courtesy of our bloomberg friends this morning about dueling dollars. if you look at with the fed looks like which is a very trade weighted to finish of dollars
strength than you do see a currency that continues to ascend with your looking at it the euro or the yen which is something that wall street likes to look at more you don't see that much depreciation. does that matter? >> i think that trade weighted measure is where we can see these strong relationships. the correlation between that trade weighted dollar and commodity prices as sexually increased so that is driving down commodity prices. when those come down people worry about deflation and when deflation comes bond yields come down and duration assets, high-quality defensive stocks tend to do well to the rally we have seen in some of those areas will just continue. anna: remind us of the link between the strength of the dollar and the defensive equity plate because that is what we are talking about. >> what you lack is that pricing power. the dollar gets stronger and the ability of the rest of the world to buy those dollar assets is
destroyed and that is the thing out andes risk assets forces people into these more defensive stocks. anna: should we always have been skeptical about the fed's ability to move on its own? >> our view has been throughout would stateat we lower for longer and the rate rice would probably be 2016. maybe that is the thing that starts to stabilize the market. if the market starts to believe that the fed will hold off than you can see the dollar comeback. the bottom line is a fed that is committed to maximum employment is one that supports global equity so even though there is a pretty aggressive selloff wheat would be saying this is a , much as thellback way we saw in october last year. anna: so you are still long-term pretty bullish despite the
weakness we have seen. key relationships we found is that when unemployment comes down, equities beat bonds. so until you believe that policymakers around the world have said unemployment is low enough we are happy to see growth slowdown and unemployment starts to rise again, that stage you start to get nervous about that longer-term pictures for equities. thank you very much. stay with us here on countdown. coming up, what to watch today other than the global selloff. greece moves one step closer to elections as the former energy minister issues to get a mandate to elect a new government. stay with us.
anna: welcome back you're watching countdown. here are the stories that you need to know this morning. asianobal selloff of shares have seen their biggest drop since 2011. commodity prices have dropped to a 16 year low and meanwhile safe haven assets have rallied while treasury yields dropped the most. oil in london has said below $45 a barrel -- $55 a barrel for the first time since 2009 since iran announced it will boost production. outputys it will expand at any cost according to its oil ministry news website. upnce is going to step railway security in the wake of the attack by the gunman last week. the transport secretary says
more random searches will be carried out on trains. investigators are trying to figure out why a gunman attacked passengers friday. let's get back to athens. tom mackenzie is there. you will tell us what to watch as things unfold on the political front. todayhis is a lineup for and in 15 minutes the head of the new democracy is expected to go to the president and basically concede that he has not been able to form a government as widely predicted. the arithmetic does not add up. handed tothen is greece's newest party headed up by the former energy minister under syriza. they will have three days to try to form their government and also are expected not to be a
will to do that but they will use those three days to get out their message to reach out to other leftist groups and unions and try to build some kind of campaign infrastructure. they currently have no office. over the weekend there were working out of syriza's offices so they need as much time as possible. on thursday they are expected to go back and say we cannot form a government either in the president's than expected to dissolve parliament here in athens and that kicks off the election campaign. the date is not confirmed but we are expecting it to be september 20. anna: thank you very much. tom mackenzie joining us there from athens. as get back to our managing director and chief investment strategist. the politics are for wants to one side. when we look ahead to the day
trading, we were talking earlier on to michael sullivan and he says that european equities could still be a buying opportunity. >> we would disagree. we think in this environment they tend to underperform the global earnings are disappointing and european equities tend to underperform 70% to 80% of the time. towe have seen, they tend outperform the cyclical stocks these days. anna: where would you expect the pain to fall the most. i have a chart here with the ftse 100 and it seems as though we could be slowing to 6000 today. anna: it used to be a relatively thensive market but in resources sector and the energy sector this is where the dollar impact is coming through most aggressively and although we have had some weakness in the euro which should boost markets
like benevolence and germany, the trouble is they are exporting into the asian region. the lack of export demand is the thing that will be killing them so even though european earnings are picking up our model suggest those earnings should be growing at 20% and they are growing at eight. anna: we have seen some safe haven buying and some of the government debt this morning on the u.s. 10 year am a for example. does that make sense to you? when we were writing last week we said watch out you will see them come down and interestingly the five-year bund yield has gone negative. it will be a defensive rotation we are seeing at this stage and it is probably still too soon to get back into more cyclical play. by the end of the year i would
expect to see some of these sick with stash cyclical markets higher than today's levels but without be this week or next week? .oo soon you anna: -- too soon anna: who is in the driving seat. when they see what is happening in china or the rest of the world you say this is a global slowdown and decide not to move. is at the areas affected or should we be watching the chinese authorities? i think to turn this around we have to see policy action from both sides. you have to see the fed decided they do want to folks on maximum employment. unless you get employment growth and investment growth, equity earnings disappoint and equities disappoint. the chinese can turn this around but the scale of the adjustment that will be required is perhaps beyond what they would want to
do. ande see this intensify that will challenge the chinese authorities to act more aggressively. what we willt that need to see is both of those actions come through. anna: how much does it matter that this is the summer and this is a period where -- >> people go away? anna: the people are not at their desks as much. >> i think they are. out of office replies have dwindled away in the last week. some ofwe will see that it goes away attends through the second half of september into october that you start to see people reassessing their positions for the year and given the selloff and the scale, more than half of the global markets we monitor are in correction territory and it will be viewed as an opportunity by many. anna: you are talking about how
longer-term you are still bullish so when do we kick into that next phase? policyhave to see some adjustment and the scope for error here is still high and you have to see some signs that commodity prices are stabilizing. the dollar is trying to come down and that will start to stabilize some of these risk assets more generally. anna: thank you very much for joining us in helping us make sense of what is happening. at 52 here in london. let's tell you what is coming up and what to watch this week. here are a number of key data points we picked out for you. on thursday you get the gdp. u.k. gdp comes friday at 9:30 in the morning. symposium. the
place later this week. thursday. janet yellen will not be in attendance but might we learn more about the central bank policies of some of the other central bank governors who are in attendance. i should say that before we get to thursday and friday, even tomorrow we get some key data out of the german market. confidenceer tomorrow as well is something to watch out for and some japanese data as well unemployment and inflation. we've seen a great deal of selling and the asian equities. in that european equities it seems we are weaker across the board for those major indices. let's get to jon ferro, he joins us now with a preview of what is coming up on his show.
jon: a busy morning. traders and investors went home after their worst week for a global stock since 2011 and they wake up this morning to more of the same. every single asian stock market in the red this morning. the shanghai composite down over 8% erasing all of the gains were 2015 and futures getting absolutely hammered. a whisper from a bear market. about emerging market fx as well. not just about a dollars story or a fed straight much more about the individual nuances going on. absolutelyities battered. the bloomberg commodity index trading at a 1999 load and brent crude south of $44 a barrel for the first time since 2009 at anna: it is going to be a busy day. thank you very much.
let's have another look at that futures to remind ourselves about the global equity selloff that has wiped $5 trillion and counting off global equity market since august 11. some $5 trillion has been lost from global equity markets and this is the picture as we had for the start of the european trading day this morning. asian equity markets are in negative territory as john was saying there. down by 5% nikkei and the shanghai composite down by 8.4% so some real selling coming through. i will do it for "countdown." i will see you again tomorrow. ♪
mark: good morning, i'm jonathan ferro. right here in the city of london -- what a week after the worst week for stocks in four years. moments away, let's get straight to your morning brief. the selloff deepens -- all major asian stock markets traded later this morning. japanese stocks dropped the most since may, 2013. chinese stocks grumbled -- the shanghai composite plunged, erasing all the gains for 2015. -- rightes crash through's five dollars per barrel since first time since march, 2009.
the bloomberg commodity index sinks to a 16 year low. futures are getting hammered. 50 futures down by over 200 points. it could get messy, the open -- let's get it for you with caroline hyde. caroline: this could be brutal -- $5 trillion so far wiped off market value since the devaluation happened in china. the worst week for the stocks. for four years. the dax -- 18% off previous highs, which means we will probably be entering bear market territory today. cap is falling by 3.5% -- this is painful if you are along with these equity markets. but it's not just europe -- this is the middle east, asia,